Frank Aquila Talks to MarketWatch About Difficulties Triggering MAC Clauses in Era of Coronavirus

March 2, 2020

Frank Aquila, the global head of M&A at Sullivan & Cromwell, spoke to MarketWatch about concerns that the coronavirus could prompt some buyers to look for a way out of deals by attempting to invoke material adverse change (MAC) clauses. These clauses allow parties to walk away from agreements in limited circumstances that have a material adverse impact on the business, operations or financial conditions of a company being acquired.
Frank noted that invoking MAC clauses can appear to be a way out in times of volatility, but these clauses are difficult to enforce. “In times of market panic, buyers often look to MAC clauses to call off or renegotiate deals, but actually events impacting the broader market rarely, if ever, are a‎ MAC,” Frank said. “MAC clauses protect a buyer from material adverse changes that are specific to the business being acquired, not adverse global economic conditions.”
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